Commercial awareness: Russia, the G20 and anti-corruption
28 May 2013
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Despite a raft of legislation, Russia has some way to go in gaining businesses’ confidence, write Vera Shaftan and William Stroll of Norton Rose
Fighting corruption is one of the priorities of the Russian presidency of the G20 and, with a global movement towards greater anti-bribery legislation, Russia is taking steps to combat the issue.
The US became the first country to outlaw the bribing of foreign officials for business purposes with the Foreign Corrupt Practices Act 1977 (FCPA). Global legislation has followed. The Organisation for Economic Co-operation and Development introduced its Anti-Bribery Convention in 1997 and Council of Europe introduced the Criminal Law Convention on Corruption in 1999. The United Nations Convention against Corruption came into force in 2005 and is the most comprehensive, both in number of nations (166) and provisions.
As the current high water mark of such legislation, the UK Bribery Act 2010 became effective on 1 April 2011. Nicknamed the ‘FCPA on steroids’, it goes beyond the FCPA and OECD Convention by covering both the public and private sectors.
Russia ratified both the UN Convention and the Criminal Law Convention in 2006. However, few prosecutions followed. Legislation continues to evolve, with amendments in 2011 and 2013, and the ratification of the OECD Convention in 2012.
Arguably Russian law needs further amendment to combat bribery effectively. Under the UK Bribery Act a bribe may be a “financial or other advantage”, a wide definition that provides discretion to prosecutors. Under Russian legislation the courts are required to quantify the bribe financially, a huge limitation when compared with the UK act.
Presidency of the G20 has placed a spotlight on Russian anti-corruption measures. Despite tougher legislation, Russia is still perceived as having high levels of corruption, ranking 133 out of 176 countries in Transparency International’s 2012 Corruptions Perceptions Index, from 143 in 2011.
Historically, cases against high-ranking public officials have been dropped after investigations have begun or the statute of limitation allowed to lapse with no prosecution.
Recently, state prosecutors investigating the Defence Ministry for allegedly selling military assets below market value fired defence minister Anatoly Serdyukov, but prosecutors say they will only bring him in for questioning if they deem it necessary.
It is clear that while the requisite legislation exists, perceptions of corruption will only improve once observers see the effective enforcement of this legislation.
Russia has taken steps to combat corruption, including tougher legislation and transparency measures. However, concerns remain that despite these high-profile measures, further reform is necessary to adequately tackle corruption in Russia.
Despite this, many international and Russian companies operate successfully there and comply with domestic and international legislation. These companies accept that things may take longer in Russia and that close attention to compliance is required. It is hoped that, with a renewed focus on anti-corruption, the business environment will further improve.